Verizon Says Redbox Deal Makes It More Powerful In Talks With Hollywood

Verizon is starting to hold “major discussions with content providers on cross-synergies” for the phone giant’s still mysterious streaming video venture with Redbox — which is due to go live in August — CFO Francis Shammo told investors today at the Deutsche Bank Media & Telecom Conference. Verizon’s hoping that the new offering, seen as a potential rival to Netflix, will give it more leverage when it negotiates programming deals for its FiOS video service which competes with cable and satellite. “We were last to market and, obviously, the content providers made us pay a premium price for that,” Shammo says. But in its new negotiations with studios, Verizon’s seeking “a content play for all of our platforms, not just for one.” He notes that FiOS is now the fifth largest video provider, Verizon Wireless has about 100M subscribers, and Redbox attracts about 30M customers to its 35,000 kiosks. There’s still no word on what the venture with Redbox will offer and how much it will cost. The companies have said that it will be a national service, involve electronic sales and rentals, and include a tie-in with Redbox’s DVD rental kiosks. Verizon’s wireline unit will own 65% of the joint venture. “Wireless is not involved,” Shammo says.

The CFO also told investors that he’s confident there’ll be smooth sailing in Washington for Verizon’s agreements to buy airwave spectrum from Comcast and other cable companies, and to cross-market some of their services. The $3.6B spectrum agreement, which needs FCC approval, is scheduled to be decided by mid-summer. Although DirecTV and Sprint have opposed it, there’s “no surprise there, so we’re exactly where we thought we would be.” Meanwhile Verizon is assuring the Justice Department that the commercial agreements with cable don’t violate anti-trust rules. “We will compete in the FiOS footprint vigorously,” he says. The company believes that there will be more technological innovation if it cooperates with cable in markets where they don’t compete. “Let’s not stop the innovation to the consumer based on this in-foot, out of footprint issue.”